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Assets held over Brazil mine cleanup

December 20, 2015

A court has blocked the Brazilian assets of mining giants Vale and BHP Billiton to ensure they pay for damage of a deadly toxic discharge that buried villages. The spill caused Brazil's worst environmental disaster.

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Brasilien Rio Doce Damm Bruch Überflutung
Image: Reuters/R.Moraes

A judge in Brazil's state of Minas Gerais ruled late Friday that the Brazilian assets of mining giants BHP Billiton and Vale SA be frozen after their joint venture Samarco was unable to pay for damage caused by the bursting of a dam at its iron ore mining operation.

"In 30 days, the companies should make an initial deposit of 2 billion reais ($502 million, 462 million euros) to carry out the full recovery plan," the judge ruled. Vale and BHP Billiton will be fined $37,000 a day if they fail to comply.

The dam burst last November - considered Brazil's worst ever ecological disaster - killed more than a dozen people, left hundreds homeless and polluted a 800-kilometers (500-miles) stretch of the Doce River across two states and into the Atlantic Ocean.

Environment Minister Izabella Teixeira said it will take at least 10 years for the river basin to recover from the extensive mining waste that's permeated the watershed.

But despite the scale of the disaster, multinational mining giant Vale had argued its Samarco venture is an independent legal entity and wholly responsible for liability and cleanup.

Federal Judge Marcelo Aguiar Machado disagreed in his 19-page judgment: "I understand to be correct the allegation that Vale and BHP, as controllers of Samarco, can be classified as indirect polluters and as such responsible for the environmental damage caused."

Prosecutors plan to sue Vale and BHP Billiton for $5.2 billion for cleanup costs and damages relating to the disaster.

Brasilien Rio Doce Damm Bruch Überflutung Atlantik Farmer
The collapse of two dams at a Brazilian mine has cut off drinking water for a quarter of a million people and saturated waterways downstream with dense orange sediment that could wreck the ecosystem for years to come.Image: Reuters/R. Moraes

Farmers' livelihoods destroyed

A BHP spokesman said in a statement Sunday that it could not comment on the ruling as the mine company had yet to receive formal notification of the decision but made assurances it would assist with the cleanup.

"We are committed to supporting Samarco to rebuild the community and restore the environment affected by the breach of Samarco's Fundao and Santarem tailings dams, in the state of Minas Gerais," a company spokesman said.

The Australian company's share price has fallen more than 40 percent on the Australian Securities Exchange this year.

jar/sms (Reuters, AP)